When consumers go to the high street now, they take all the expectations of frictionless convenience they’ve formed online, but – in bothering to actually show up – they also anticipate something better. The best in-store retail is by delivering shopper experiences that online cannot match. In one important respect, however, high street retail is letting itself – and consumers – down.
Shopping isn’t just about selecting goods, it’s also about how to take advantage of offers and discounts, pay for and even finance purchases. It’s about engaging with brands through loyalty rewards and the appeal of trusted brands for the purpose of gifting. For all these ‘commerce enabling’ activities, the systems employed today by physical stores are tired at best, often clunky and actually off-putting for punters.
Arguably the biggest change in-store commerce had in recent years is contactless payments, initially through contactless cards and more recently, and practically ubiquitously, through mobile wallets. Indeed, for years, the industry has regarded mobile wallets as if they were simply a faster way to pay. But there is a much bigger role for mobile wallet in physical retail. McKinsey describes digital wallets as rapidly evolving into the primary interface through which consumers store value, identify themselves, and interact financially with brands – not just a payment method, but a control layer for commerce itself.
This is not an incremental upgrade. It is a structural shift in where commercial power sits.
More than four billion people now use digital wallets globally, according to Worldpay’s Global Payments Report, and wallet-based payments already account for over half of global e-commerce transaction value. The direction of travel is unmistakable. Consumers now operate in a wallet-first world.
Yet when those same consumers walk into a physical store, the experience regresses. Loyalty systems fail to recognise them automatically. Gifting collapses into plastic cards, printed receipts or fragile alphanumeric codes. BNPL, where available, often operates through separate terminals, QR flows or staff-assisted processes that break the rhythm of the purchase. The wallet becomes digital, while the in-store financial experience remains stubbornly analogue.
This matters because in-store retail is not cheap. Physical retail carries higher fixed costs than online – staffing, rent, inventory exposure and operational complexity. But it also delivers something digital cannot: high-consideration environments where customers can touch products, ask questions, compare options and build confidence before committing to higher-value purchases.
McKinsey’s omnichannel research consistently shows that customers who shop both online and in-store spend more and remain more valuable over time, precisely because physical environments support considered, higher-ticket decisions.
In other words, stores are where retailers should win economically. But the financial layer too often undermines that advantage.
Why In-Store Value Breaks Where Online Flows
Online journeys quietly solved three problems that physical retail has not. Financing, loyalty and gifting are resolved before the customer commits to payment. BNPL is presented at the moment of decision, not after the queue forms. Loyalty balances are visible, calculable and instantly redeemable. Gifted value applies natively, without codes, staff intervention or ambiguity.
In-store, the inverse is true. Financing is limited, fragmented or delivered through parallel experiences that sit outside the main checkout flow. Loyalty depends on the customer identifying themselves separately – opening an app, scanning a QR code, presenting a loyalty card or responding to a staff prompt – all of which interrupt momentum and frequently fail. Gift value is treated as an exception rather than a normal way to pay, often requiring manual checks, supervisor overrides or staff familiarity with edge-case processes.
The customer does not seamlessly choose how their value is applied. They attempt, or wish, to use value they already hold, only to discover the system cannot recognise it in that moment. It is no wonder in-store is fighting with one hand tied behind its back.
Each of these frictions may seem small in isolation. Together, they explain why in-store struggles to convert the same intent that flows effortlessly online. Demand exists. Value does not follow.
Loyalty, Gifting and BNPL Are One Strategic Failure
Consider loyalty. Harvard Business Review has long argued that most loyalty programmes fail because they reward transactions rather than deepen relationships. Loyalty is not primarily a rewards mechanism. It is a strategic intelligence engine.
Tesco understood this decades ago. Clubcard was never really about points. It was about coupling the payment event to the data capture event, allowing Tesco to understand behaviour, optimise ranges, personalise promotions and make strategic decisions based on real spend patterns.
That coupling is exactly what breaks in modern in-store environments. When a customer attempts to pay in a way the loyalty system cannot automatically interpret or redeem against, the data trail disappears. Spend becomes invisible. Attribution fails. Retailers and mall operators lose the ability to understand which incentives work, which tenants benefit, and how behaviour changes across locations and categories.
The same intelligence gap exists in gifting. Digital gift cards are now one of the fastest-growing segments of consumer payments. McKinsey highlights digital gifting as a major driver of incremental spend and customer acquisition, growing significantly faster than physical formats.
Yet in-store redemption frequently strips out data entirely. Mall operators, marketplaces and multi-tenant environments cannot reliably see where gift value is redeemed, how it drives cross-shopping, or which tenants capture the benefit. Strategic insight stops at the till.
BNPL completes the pattern. The Financial Times has documented how BNPL has evolved into a customer acquisition and distribution channel for merchants, not just a credit product.
But where BNPL experiences remain inconsistent or operationally heavy in-store, approvals secured digitally fail to translate cleanly into physical purchases. The result is lost conversion and another blind spot in performance data.
Across loyalty, gifting and BNPL, the underlying issue is the same. Value is bound to systems that assume the point of sale controls redemption. When that happens, data fragments, intelligence disappears and strategy weakens.
The Effortless, Invisible Layer Retail Is Missing
The opportunity is not just about real-time execution. It is about making value invisible.
Imagine a shopper walking into a store. Their wallet already contains some form of value – perhaps loyalty rewards from the brand, a gift balance issued by a marketplace, or a pre-approved financing option from a third-party provider. These are not delivered by one system, but they resolve through the same place: the mobile wallet.
As the shopper browses, relevant prompts appear directly in their wallet or notification layer – for example, a reminder that rewards can be redeemed in-store, confirmation that gift value is available at this location, or reassurance that financing is already approved if needed. Nothing interrupts the shopping experience.
At checkout, nothing changes operationally. No prompts. No questions. No alternative flows. The shopper taps once. Value resolves automatically in the background. Loyalty applies. Gift balances clear. Financing completes if used. The shopper receives instant confirmation, visual reinforcement and a small but powerful sense of reward that tells them something worked.
No friction. No staff involvement. No cognitive load.
Because all of this resolves through standard card payment rails via digital wallets, every redemption generates clean, consistent data. For retailers and mall operators, that restores full visibility into where value is redeemed, how it drives behaviour, and how engagement translates into real spend. Intelligence flows back into strategy, rather than stopping at the till.
Why the Centre of Gravity Must Shift
When retailers treat the point of sale as the anchor of the customer relationship, they implicitly accept friction, breakage and data loss as inevitable. They are building modern experiences on infrastructure designed for plastic cards and batch processing.
In a wallet-first world, value that cannot move with the customer becomes value that never gets redeemed. This is not a technical failure. It is a strategic one. Retailers and mall operators lose margin not because demand is weak, but because their value systems cannot see or respond to how consumers actually behave.
Shifting the centre of gravity from the till to the wallet is therefore not a UX choice. It is a strategic imperative. It is how retailers regain intelligence, restore attribution and make physical retail economically defensible in a digital-first world.
